IT companies lead the field in e-procurement take-up in EU

Take-up of e-procurement in the European Union remains stubbornly low despite efforts by authorities to make it more easily available and useable, although IT companies are among the first adopters.

Less than 5 percent of the total value of procurement budgets is processed electronically according to the European Commission's 9th eGovernment Benchmark. This figure includes "re-orders" from pre-approved service providers, which may have originally been approved without using e-procurement.

This reflects the technical, logistical and administrative complexity of the changeover say authors of the report, Graham Colclough, vice president, global public sector, Capgemini, and Gabriella Cattaneo, research director, IDC European Government Consulting.

Although much of the resistance to e-procurement is cultural, uncertainty about authorization and authentication is also a big barrier. "The limited use of e-signatures is a huge problem," said Cattaneo. "Many companies think they don't have e-signatures, but if they have been paying taxes online, then they do have it. They just don't know it."

Although e-procurement platforms do not tend to be specialized by sector -- 65 percent of them covering three or more sectors -- certain trends can be seen. "Office suppliers and repeat orders have higher take-up of e-procurement. IT is also very frequently the first sector to take up online processes. As is health care particularly repeat medicinal purchases. We are seeing a definite trend in making this mandatory," said Cattaneo.

The report also examined the visibility of e-procurement on public buyers' websites. There has been some significant improvement in this area. "High visibility" increased from 56 percent in 2009 to 71 percent in 2010. "Before we used to see authorities trying to do the websites themselves with a lot of confused design that was difficult to navigate, particularly at a local level," said Colclough. "But sometimes central portals work better -- service buyers can just update it. But it depends very much on the size of the country or region and sometimes a network of portals can work better."

Almost all of the EU27+ (the 27 E.U. countries plus Croatia, Iceland, Norway, Switzerland and Turkey) have a national e-procurement platform or a procurement portal in place. The two exceptions are Iceland and Greece, but the Greek platform is under construction.

According to the Italian national procurement agency, in Italy approximately 4 percent of public spending on goods and services is managed with electronic tools. In France it is just 2.5 percent. In other countries or regions this share is substantially higher -- the Portuguese government claims online processing of almost all national authorities tenders in 2010. Other countries where e-procurement affects a higher share of public spending are Ireland, Malta, Estonia and Cyprus.

However, there is a lack of a systematic gathering of evidence and so national data are difficult to compare. "The variability across countries is massive," said Colclough.

Procurement is divided into two phases: the pre-award phase, encompassing publication of tenders and procurement notices, submission of proposals and selection of suppliers; and the post-award phase, placement of orders, invoicing and payment. "Rarely is the whole process online," said Cattaneo. "Some countries claim they operate e-procurement even if just one element is online, so it's very difficult to measure." One trend that is clear: electronic processing of the pre-award phase is much higher than post award.

Although 70 percent of public authorities are now working with e-procurement, its low take-up means that the potential savings on public purchases, estimated as high as 30 percent, are not being realized. But making e-procurement mandatory could be the solution. "In Scotland were there was a carrot-and-stick approach to change the culture almost a third of public procurement is processed electronically," says Colclough.

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